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I pay for a private occupational disablement insurance plan. This is on the first look a good thing from my point of view, because 25% of all employees encounter a disablement preventing them to continue work in their current occupation.

The problem is, in my contract there is a disqualification for psychic disorders. A single analysis Analyis by Morgen & Morgen I found, shows, that psychic/neural disorders sum up to nearly a third of all disablements. Which makes my insurance a lot more expensive than a standard contract, because I'm entitled a third less insurance benefits compared to an average signee.

This might be even tolerable for me, but I think that in my case (engineer) the probabilites for different causes might have a different impact on my ability to perform in my job. E.g. it is much more likely that I can still work in my job after a traffic accident than someone doing road works or a miner.

I came to the conclusion that in my case the probability of being unable to continue in my job because of a psychic disorder might encompass a much bigger percentage of all causes than for an average worker.

My question is: Does anyone know about any comparable statistics for different occupational groups? And if not, how could I estimate the remaining benefit, enabling to make a decision whether or not to keep this (rather expensive) insurance?

Of course there are other points of view on this type of insurance. E.g. the probability to get insurance benfits without a lawyer tend to be very low. But I want to put that aside, because I want to evaluate that independently.

Addendum: I looked up the terms in my insurance policy. Normally they will pay in any case of psychic, psychiatric or psychosomatic condition which renders the signee unable to do the work done at the time of the incident. Of course this is subject to experts testimony. However in my personal contract all of these conditions are excluded explicitely.

I looked up the terms of my insurance police. The standard contract has a lot of exclusions like consequences of commiting a felony or war etc. At no point there is an exclusion for any of neurological/psychic/psychiatric issues. Named restrictions are written down directly in my contract with the insurance company and apply only to me. Country is Germany and I was priced a standard contract for engineers or comparable occupations.

another addendum I didn't want to reveal that here explicitly but I think I have to explain the background of my reasonings.

I underwent psychotherapy before I applied for that insurance. I got a printed book encompassing the terms of that insurance, which contained no exclusions for named issues. However, to get that insurance police signed I had to write down my full medical history in detail (of course encompassing psychic issues). After having done that I received an offer from the insurance company for the same price but with an extra page with special exclusions (psychic issues) printed in bold with my name on it.

Bottom line: I've had a mental health issue, I told the insurance company that I have had such, and the insurance company told me: "you can have that contract, but in your case we won't pay if you can't work because you are probably going to have it again."

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    Please re-read and edit your question. There is a difference between psychic conditions and psychiatric conditions and psychological conditions. It is highly likely that no insurance company covers psychic conditions but that some will cover psychiatric disorders and perhaps psychological disorders. – Dilip Sarwate Oct 25 '18 at 20:33
  • @DilipSarwate: Added that to my question. They really do not exclude anything in their normal terms. Otherwise the difference might be neglegible. In this case I don't think it is. – Ariser Oct 25 '18 at 21:00
  • What country are you in? Have you actually priced a "standard" contract? Are you sure the exclusion you're seeing isn't a standard exclusion? I'm sure they exclude a ton of things in the normal terms, any disability occurring in the commisson of a felony is a very standard exclusion, act of war is another. It seems like you've jumped to a lot of conclusions in response to one set of contract terms and one analysis report... – quid Oct 26 '18 at 7:56
  • @quid I looked up the terms of my contract and added that to my question. – Ariser Oct 27 '18 at 18:51
  • @quid: I don't think I "jumped to conclusions". I just see, that I'm entitled to significant less insurance benefits than other people of same age and occupation while paying the same. And now I want to know how I can estimate the difference in numbers. – Ariser Oct 29 '18 at 10:45
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I'm not familiar with insurance policies and law in Germany, so there could definitely be quirks I'm unaware of in your case. But I am well-versed in indemnity insurance as a product.

For your first question, I am not aware of any reliable and free-to-access statistics for all kinds of medical/psychiatric conditions by occupational group. You can check sociological journals as well as industry publications, which often have research that addresses those (though not necessarily in a way that produces what you are looking for).

For the second question, I'm afraid you likely cannot estimate the benefit very well. You almost certainly will not be able to do it better than the insurer offering you this plan. At a minimum the "expected benefit" of the insurance (kind of a rough concept for indemnity insurance in the first place) is going to depend on your personal resources and your appetite for risk.

If you are particularly concerned about the mental health risk, and not so much about the rest, then the insurance policy may not be a good one for you. The insurer has specifically carved out the benefits related to inability to work due to mental health issues, so in such a situation you will receive no money. That's why the price is the same as before you described your medical history: the insurer is specifically refusing to carry any additional risk related to those issues.


If you would be interested in keeping the policy despite the carve-out:

Here is the basic issue: it's virtually impossible to estimate an individual's risk for losing the ability to work due to a medical or psychiatric condition, but it often is possible to reliably estimate the rate that that occurs for a large pool of people over a period of time. That's what indemnity insurance is.

The insurer already has all of the information on prevalence of these medical issues in the region in which they operate, how often those issues being present affects work and in what ways, and how much money they have to pay out in benefits to their overall risk pool. (That's all the information you are looking for, plus more). They then underwrote the policy (or policies, depending on how they're structured), set a premium cost, and started offering the insurance.

They expect to make a profit, which means that the expected benefit to a "typical" covered individual should be negative-- the insurer expects to get more money in premium payments than they pay out in benefit payments. What you get out of the bargain is the opportunity to operate at the measurable (with some error!) average risk of the population instead of at your unknowable level of individual risk.

So whether or not you should keep the policy isn't (usually, at least) a simple financial calculation. Questions that only you can answer-- like "how likely do I personally think it is that I won't be able to work?", and "if I were unable to work due to [condition X], would I be able to get by, and would I be OK living that lifestyle?", and "how much do I value the risk reduction from the premium payments compared to other ways I could spend the money?". These are hard questions to answer at all, and figuring it out tends to involve spending a lot of time with a choice board (or similar instrument) rating quality of life in different scenarios in front of an economist.

Ultimately, if you want to reduce your exposure to risk for conditions that are actually covered in the policy, and feel OK paying at least the premium amount for that reduction, then keeping the policy makes sense. Even though you should still expect a negative return from your premium payments.


Bonus information:

You might have noticed above that I said it's usually not a simple financial calculation to figure out an expected benefit from health insurance, and it's almost impossible to figure out your expected benefit. There are two cases I'm aware of that change this.

1) You know, for certain, that you will need particular medical services in the coverage period. If you know it, but the insurer is only estimating your average risk, then you can choose a plan that maximizes your benefit per premium payment. This is generally hard to do.

2) You are committing insurance fraud and so already know what provisions of the policy will be triggered, and under what circumstances. The insurer is estimating average risk, but you are causing the covered event to happen, not waiting to see if it randomly befalls you or not. I recognize that this is very unlikely in the case described, but as a general rule do not commit insurance fraud.

  • This is really a good description of several aspects of my problem. It partially supports my reasoning and adds another viewpoint. – Ariser Oct 30 '18 at 16:06

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